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The Consortium's computations show that costs of medical services provided at inpatient medical care facilities could be up to 40 fold greater than costs of services provided by outpatient and polyclinic in stitutions. The costs of expensive medical services provided at the inpa tient facilities accounts for between 40 and 90% of all the respective costs, in which the proportion of the expensive kinds of services makes up as much as 14%. The Consortium experts note considerable re gional distinctions in respect to costs of provision of medical services by inpatient facilities and outpatient and polyclinic institutions located outside the administrative centre.

For the purpose of computing the efficacy of a partial refusal of the provision of the expensive medical services in favour of inpatient substituting technologies, the researchers conditionally reduced vol umes of medical services provided in an inpatient facility to 50% of treated patients. Basing on the respective computations, they note that such a swing ensures an economic efficacy accounting for some 40% of the total costs of medical services provided by inpatient and outpa tient and polyclinic institutions. The data evidence the existence of con siderable differences between regions in terms of specific costs of medical services per treated patient. The researchers draw a conclu sion that a restructuring of the medical network on the regional level and introduction of a multi tier system of provision of medical assis tance on the basis of the designed standards allows a 2535% contrac tion in the need for funding the basic volume of medical assistance, with the saved funds being possibly reallocated to other health care spheres, such as, for instance, modernization of the material and tech nical base of the sector.

Another expert centre, the Independent Institute for Social Policyconducted a detailed evaluation of the restructuring of the medical in stitutions network in two pilot regions according to the 2000 territorial programs. The first region (region A) is a recipient region with a rela tively low level of per capita expenditures and the average national level of urban population. The restructuring program suggests a 14% con traction of the volume of medical assistance at inpatient facilities and a 2% reduction in the volume of emergency assistance. It is planned to increase volumes of outpatient assistance at daily inpatient facilities by 22%. Should the restructuring be complete, the region would save 11% of the actually accomplished volumes of medical assistance. The other region (region B) is a donor region with a relatively high level of per cap ita incomes and a high specific weight of urban population. Its restruc turing program implies a 16% contraction of the volumes of inpatient Besplatnoye zdravookhranenie: realnost i perspektivy. WP1/2002/07. nezavismy insti tut sotsialnoy politiki. M.: OOO "Probel 2000", 2002. T.V. Bogatova, E.G. Potapchik, V. A.

Chernets, A.E. Chirikova, L.S. Shilova, S. V. Shishkin (ed.).

assistance and 14% one in the volumes of emergency assistance, coupled with a 22% rise in the number of visits to polyclinics and a 2% rise in the number of visits to daily inpatient facilities. The restructuring would ensure a conditional saving of 4% of the actually provided vol umes of medical assistance. Such a meagre saving is explained by the necessity of a greater increase in volumes of outpatient and polyclinic assistance than needed to merely compensate for the decrease in the inpatient assistance.

The researchers picked two municipal entities in each region and studied effects from the network restructuring on them. Their computa tions of capacities of inpatient institutions needed to accomplish a mu nicipal order evidence that all the municipal entities have an excessive number of beds that can be reduced by 50% on average (primarily by downsizing surgery departments that lack modern equipment), while a part of hospitals located in the countryside can be transformed into so cial services and protection centres.

Results of the research into financial consequences of the restruc turing showed that swinging medical assistance from the inpatient treatment to the outpatient and polyclinic one would allow municipalities in region B to enjoy a conditional saving ranging between 8 and 18% and 36 and 59% for municipalities of region A. These assessments are comparable with those made by the Consortium.

The IISP research is provocative, as it considered main risks associ ated with the restructuring. More specifically, it examined the impact of the restructuring and contraction in the excessive number of beds on the transport accessibility of medical assistance for rural residents. To lower the risk, the researchers suggested compensating for the con traction in rural hospitals by reinforcing central district hospitals with medical vehicles.

The restructuring also compels one to take into account the risk of the rise in instability on labour markets, particularly the regional and municipal ones. The restructuring of the budget institutions network will require contracting a part of medical jobs in the framework of the lower ing of the volumes of an excessive inpatient based assistance and strengthening of the outpatient and polyclinic link, as well as daily inpa tient facilities. Some regions, mostly rural ones, may be compelled to close down some medical institutions, which would necessitate em ployment of their medical staff. Meanwhile, the budget network reform may contribute to the rise in average wages, thanks to an increase in the labour compensation fund and its distribution among a smaller number of employees.

As highlighted by the IISP analysis of effects from the medical net work restructuring in different municipalities, the challenges associated with the contraction of a part of medical jobs can be partly neutralized by rather a high level (1.1 to 1.5) of extra duties the inpatient medical staff will be able to assume. Because of that, the planned 50% contrac tion in the bed fund in the examined municipalities should not result in an actual dismissal of medical staff, albeit due to the fall in the extra duties coefficient, their wages may fall by 10 to 20%. Overall, it can be assumed that the plausibility and degree of the fall in medical staff's real incomes depend on a necessary scale of restructuring in specific re gions and municipalities.

4.1.3. Transforming a part of health care institutions into other organizational and legal forms While the sections above deal with general criteria of transforming budget institutions into organizations of new organizational and legal forms, this section focuses on specifying general criteria for health care institutions.

While transforming health care institutions into AO and PANO forms, one needs first to exclude a violation of the citizens' rights for the free medical assistance The danger of violation of their rights becomes most likely in the event the transformed institution has been a monopolist on the local market. If, for instance, there is a sole medical institution in town, its transformation into PANO may entail its refusal of the govern ment order on the delivery of free medical services to local residents in a necessary volume and under acceptable terms. As a result, most local residents would have to pay for medical assistance.

The expansion of the health care institutions' economic autonomy due to their transformation is associated with the risk of lowering the quality and volumes of the free medical assistance to the population caused by medical personnel's eagerness to develop the sector for paid services. This risk appears particularly great, should the current level of payment for medical services from the budget remain lower vis vis market prices. This is related to the fact that the official payments in favour of AOs and PANOs for a better quality of their services or ur gently provided services would be accrued into their budgets and partly spent on labour compensations to their staff. This may encourage them to deliberately contract the volume and quality of free medical services and force patients to receive those for cash.

The risk can be lowered due to the development of a system of clinico economic standards of provision of free medical assistance un der various diseases (states of health). Development of such standards is highlighted in the existing proposals of the RF Ministry of Health and Social Development on the health care reform avenues. Meanwhile, it should be taken into account that the introduction of clinico medical standards does not eliminate other factors of reproduction of the prac tice of informal payments for medical assistance and, in particular, shadow payments to doctors for an unjustified prescription of analyses and procedures in the framework of the standards. Patients may find the amount of such direct informal payments considerably lower than an official payment for the respective services to the cashier's office at the medical institution, as dictated by the current law.

The health care sector provides an opportunity for designing stan dards of financing that are linked to volume (resulting) indicators for practically all kinds of medical institutions' operations. For instance, hospitals can be funded according to standards for each cured patient (a complete care case). However, considering that the standards of financing should be differentiated by groups of illnesses (clinico statistical cases or nosological groups), or by individual kinds of ill nesses, their design is going to take much time. That imposes con straints on the pace of the transformation of health care institutions.

The transition from the estimate based funding of health care institutions to the performance based funding should lead to a medical organization no longer seeing much difference between various budget and extra budgetary sources of financing. That is why the use of the proportion of extra budgetary incomes of a given institution as the crite rion of its transformation into a new form looses its sense. Meanwhile, it can be presumed that in the first years after the change of the mecha nism of financing the health care organization, the overall volume of its public funding should not grow drastically, because of the inertia inher ent in medical technologies used by medical organizations. Accord ingly, extra budgetary sources of financing will play a significant role (first, the proportion of extra budgetary incomes in the medical organi zations' budgets will remain great; second, in all likelihood, standards of funding will be lower than market costs of medical services (payments charged from patients). That is why the employment of an index of the correlation between medical institutions' budgetary receipts and extra budgetary ones as a criterion for decision making on their transforma tion into new forms will bear a certain sense. The index, at least, can be employed to justify for the transformation of a given institution into an other form and conduct a more detailed analysis of the appropriateness of such a transformation.

Meanwhile, the "proportion of incomes from extra budgetary opera tions" criterion appears to be of a limited significance to the health care sector, as the bulk of institutions therein provide a free medical assis tance to the population at the expense of the budget funding and com pulsory medical insurance (CMI). The proportion of receipts from paid medical services averaged across the sector accounts for 1525%. Ac cording to the data on operations by federal health care institutions, it is disinfections ones that enjoy the greatest proportion of incomes from their extra budgetary operations in their budgets (73%), while educa tion institutions of medical profile have the smallest one (17%) (See Ta ble 24 for greater details). Thus, in the health care sector there also are institutions for which the noted criterion is rather indicative. Notwith standing the aforementioned disputable issues, the appropriateness of employment of the criterion of proportion of extra budgetary incomes under the reorganization of health care institutions is also determined by the fact that data on extra budgetary incomes of medical institutions form one of the very few indicators available for quantitative analysis.

One can suggest the following variant of employing the noted crite rion for the decision making on transformation of health care institu tions into other organizational and legal forms: should the proportion of extra budgetary funds in the institution's budget account for under 20%, it would be appropriate to retain its current organizational and le gal form. In the event the noted proportion fluctuates within the range of 20 and 80%, it is necessary to transform it into AO, while if its over 80% into PANO.

Table The Proportion of Extra budgetary Incomes of Federal Institutions That Fall under the Purview of the Federal Agency for Health Care and Social Development and the Federal Service for Supervision in the Area of Health Care and Social Development in The number The average proportion of budget Types of institutions of institu- funding in the overall volume of tions* funding, as % Institution of disinfection profile 40 72.Institution that deals with evaluation, certifica7 70.tion, standardizing Research organization 68 24.Therapeutic and preventive care institution 110 20.including:

Medical centre 24 25.Sanatorium and resort institution115 68 16.Rehabilitation centre 18 16.Institution ensuring operations of the RF Ministry for Health Care and Social Development, its 8 20.Services and Agencies Education institution 121 17.* The number of institutions by which the data on extra budgetary incomes was available Source: computed on the basis of data of the Federal Agency for Health Care and Social Development and the Federal Service for Supervision in the Area of Health Care and So cial Development.

Considering noted criteria of decision making on reorganization, it appears necessary to retain a part of medical institution in their current organizational and legal form and continue funding their contents ac cording to the estimate. It is possible to identify two conditions of retaining an institution in its current form:

With the proportion of extrabudgetary funds for specialized children sanatoria account ing for 23%, while in tuberculosis sanatoria for adults 1%.

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